7 ACRES mature medical cannabis plants were harvested from the Kincardine-area facility in mid-August, 2016 and the crop is the first of two to be tested by Health Canada in order for 7 ACRES to receive its license to sell from the federal government. Pictured: 7 ACRES director of production Matt Rogge, vice president Sarah Herburger and director of operations Peter Herburger celebrate the cutting of the first medical marihuana plant on Aug. 15, 2016. (Troy Patterson/Kincardine News/Postmedia)

The first harvest of medical marihuana at Kincardine's 7 ACRES hybrid greenhouse is setting the stage for what the company aims to be the largest capacity legal production facility worldwide.

Staff marked the cutting of the first medical cannabis plant during a 'stem cutting' ceremony that included a number of gardening staff and management present on Aug. 15, 2016.

All of the plants from the 16,500-square-foot 'Phase Zero' test greenhouse area are the first set of cloned strains of cannabis being dried, processed, packaged and shipped for third-party laboratory testing required by Health Canada.

About 100 grams from each of the two harvests, as well as 100 grams from each strain of cannabis, will be tested for potency, consistency, contaminants and overall quality standards set to protect what will be the future medical marihuana patients buy from the Kincardine-area greenhouse.

“The lab testing is going to tell us the strength of the medicine, and then we can do more fine selection,” said Peter Herburger, 7 ACRES' chief executive officer. “Potency is very important. The reason going forward is so we have at least 99 per cent assurance that the plants we grow from one mother are the same potency and consistency.”

7 ACRES allowed Kincardine News exclusive access to Phase Zero to document the first cut of the company's harvest, and showcase the development that has occurred since the company started cultivating cannabis in March 2016.

Walking into the stretching 'Phase Zero' area revealed a vast numbers of skunky, eight-week-old budding cannabis plants lined in rows, cared for daily by gardening staff. Fans circulated the air and the sun shined in through adjustable blinders above, past the grow lights that combined allow for about 12 hours of sunlight, or 18 hours earlier in life in the nursery growing area.

Herburger allowed limited access for photos of both Phase Zero and the nursery growing area, which holds both the 'mother' plants and the cannabis clones in their earliest stages.

Plants are harvested using detailed procedures and a custom built drying rack. During the first cutting, staff proudly posed for photos beside cut cannabis plants hanging on drying racks, similar to anglers posing with a fish caught during a good day on the lake. Whole plants are then placed into drying chambers, where they are dried for 10-14 days, which the company said improves the quality of the buds. It's then divided into batches and placed into specific packaging to ensure quality in storage. Finally, the company must take 120 gram representative samples that are kept for more than two years as a record of the product’s quality.

The facility has a series of security and environmental controls that staff must strictly adhere to, as the pharmaceutical facility must regularly demonstrate to Health Canada compliance to many regulations, from sanitation to record keeping and more.

The federal regulator shows up for inspections regularly to ensure all systems continue to meet regulations, making for a full day of work for staff to demonstrate compliance, Herburger said.

Matt Rogge, 7 ACRES' director of production, said clones allow for consistency in production, as the plants are identical in nearly every way aside from environmental impacts, which they are able to avoid in the controlled environment.

“We can make several thousand, all from the same mother (plant),” Rogge said. “What we're doing here is growing out all the different genetics from our different mothers. And we're going to select the best one and move forward with that production.”

The best 10-12 plants are analyzed in a lab for things like potency, and the smell it will create, of the current nine strains of medical cannabis they carry, across more than 300 sets of genetics.

“We'll use that analytical data, in combination with the physical traits we can observe – yield, flower time, resistance to pests,” said Rogge.

By the time its Phase 1 is licensed, the company plans to have about 20 strains of medical cannabis growing for medical patient costumers, Herburger said. They also plan to increase to over 30 staff this fall, of the 100 total they hope to have at full production in the coming years, and are currently looking for a number of staff to fill positions from record keeping, IT and grower assistants.

Supreme Pharmaceuticals CEO John Fowler said the harvest came nearly three years to the day since 7 ACRES, formerly Advanced Medical Marihuana Canada (AMMCan), set out to refurbish the existing 340,000-square-foot Bruce Energy Centre Greenhouse property as a subsidiary owned by Supreme Pharmaceuticals.

“The first harvest is a milestone event for Supreme and 7 ACRES, and everyone in Kincardine and Bruce County that was behind us, said Fowler.

From a capital market perspective, Fowler said, the company has been doing “very well” both in terms of stock price and management's ability to raise capital to fund the 80,000-square-foot, multi-million-dollar expansion of the greenhouse's Phase 1 growing space.

“When Phase 1 is complete, we expect to be producing a capacity of 10,000 kilograms per year, which will cement our position as one of the world's leading cultivators of legal cannabis,” Fowler said, who added they have had international interest in their business but their focus is within Canadian borders.

“Our focus is on one thing, building out the entire greenhouse in preparation for recreational sales, as well as the growth of the medical marihuana market here in Canada,” he said.

Asked whether the US Drug Enforcement Agency's recent announcement to continue categorizing marihuana as an illegal Schedule 1 drug, alongside heroin, LSD and ecstasy, may impact the company's business, Fowler said it allows Canada's medical marihuana market time to grow without American competition.

“On one hand it's a disappointing decision for the medical cannabis industry internationally and the pace of research that is needed to really help out sick people,” he said. “However, for Canadian businesses like Supreme and other federally licensed businesses in Canada, the decision means additional time where we can grow our businesses and prosper without direct competition from the United States. So possibly that has massive benefit for Canadian business and jobs.”

As an example, Fowler said California and Canada are about the same population-wise, yet Canada has about 30 marihuana companies to California's 3,000, which is an example of the market scale and potential between the two countries. But he said as long as it's federally illegal in the United States, it's harder to raise financial capital to do a large-scale greenhouse such as 7 ACRES, which allows for business to grow in Canada.

“Every day that marihuana remains a Schedule 1 drug in the United States is an economic win for Canada.”

When Phase 1 is completed by next year, 7 ACRES will be one of the top three producers of medical marihuana capacity in Canada, he said. By full capacity (Phase 5), they will be the “most productive marihuana facility in the entire world by total output,” Fowler said.

For example, Fowler said, their goal for the 310,000-square-feet of grow space is to produce between 50,000 and 100,000 kilograms per year. Their most recent competitor's 50,000-kilogram goal will require 1-million-square-feet of space.

“So we are three to six times more efficient per square foot," he said. "So at full capacity there are a few properties that are bigger, but we believe we are the biggest by output, which should matter to shareholders in terms of economic returns, to clients in terms of stability of supply and to stakeholders in terms of jobs and local investment.”

The efficiency comes from the greenhouse's 'hybrid' design that allows for the benefits of growing indoors but also uses a combination of grow lights and natural light.

“What our first crop is starting to prove for us is the hybrid system works. It combines the benefits of indoor and the benefits of greenhouse while mitigating the negatives of each, and the result is a net benefit – high quality product, high output, with low cost.”

Fowler commended the staff and management at the Kincardine facility as well, for making it happen in a way that has allowed the company to move forward swiftly.

“The team has done a great job of transitioning into production, of professionalizing the business and of acting in a manner becoming of a much more mature business,” he said. “It's just fantastic what they've achieved, not just the output of the first crop, but the level of compliance and innovation and improvement we've had, even over our first half-year of cultivation. In addition, more than half the staff and the senior management team have invested their own money into the current private placement so they can own a piece of what we're all building together.”

Fowler said the most recently private investment numbers represent a $500,000 investment from their staff, as well as nearly $2 million from across Bruce County.

“It's truly a local business... proudly rooted in Kincardine,” he said.